Blue Ocean Strategy

We constantly remind ourselves that differentiation is critical in marketing. However, there are very few books that provide a way to make it possible. The book Blue Ocean Strategy by W. Chan Kim explains the concept as well as provides a methodology.

Most Often, we compete in the market with minor points of differentiation. It eventually boils down to a price war, and selling cheaper becomes the only USP. Kim uses the metaphor of the red ocean to describe the cut-throat competition. He suggests an alternative way of differentiation. It is based on the premise of creating value by chartering completely new, uncontested territory. The fundamental way to do it is to break the industry boundaries. For instance, Movies have the primary objective of entertaining their customers. However, Comic Books also serve the same purpose for the customer. The animation industry broke that barrier and created a blue ocean in which features of mass reach of the movie industry could be leveraged with the mystical power of comic book characters.

Many a time, products are designed with the mass customer in mind. However, better opportunities exist beyond the mass market. By focusing on the outliers, not only a new segment can be created, but also the existing market can be expanded.

Kim suggests six ways of creating differentiation. They are illustrated in my doddle. When we look beyond industry boundaries and customer groups, we identify attributes that could become points of differentiation. However, not all are equally important. We may decide to eliminate, raise, reduce, or create points of differentiation. These need to be used in combination with the six utility levers suggested by Kim. These are - Customer Productivity, Simplicity, Convenience, Risk, Fun & Image, and Environmental Friendliness.

Finally, it is critical to get the sequence of executing the strategy right. Kim suggests a four-step approach. It starts with Buyer Utility, Price, Cost, and finally on Adoption challenges.

I hope you find this doodle helpful in assessing your business and making the necessary shift. Do give me your feedback.

Subodh